Taken from the BBC

There are strict rules governing the pursuit of debts

Debt collectors have been warned not to disclose people's debt problems by leaving messages with the neighbours of those being chased to pay up.

The Office of Fair Trading (OFT) said it was "unacceptable" that debt collectors left messages with neighbours of those being traced.

This had the potential to cause embarrassment, it said.

The OFT has already told one London-based company to stop this practice and is pledging to monitor other companies.

"It has the potential, whether unintentional or not, to lead to the disclosure of private financial affairs and to cause distress and embarrassment, and we have made this clear in discussions with the Credit Services Association (CSA)," said Nigel Cates, of the OFT.

Fair treatment?

This practice breached the spirit of guidance issued by the OFT to debt collectors because it could reveal to neighbours that somebody was being chased for debts, Mr Cates said.

Link Financial Limited, a "trace and collect company", has promised to stop this practice, following a review carried out by the OFT and Lambeth Trading Standards.

Debt collectors will soon be required to treat people with financial difficulties fairly.

From the end of May, debtors will be given a "breathing space" if they have sought help in making repayments. This means that once a debtor has sought specialist debt advice, a debt collector must give them 30 days grace.

The breathing space clause will be written into the CSA's code of practice which governs its 300 members.

Current rules that ban so-called "fishing trips" - where collectors contact people with a similar name to the genuine debtor. It is also illegal to harass consumers.

An average debtor may owe as much as £27,000 across up to 10 separate accounts, the CSA estimates.

Typical debts include unpaid utility bills, credit card debts and missed repayments on bank loans.

This links in nicely with this post Illegal Letter

I wonder why are these companies not being punished????JD

OFT Response.

The OFT is warning the debt collection and tracing sector that using neighbours to pass on messages to trace subjects is an unacceptable practice and should be ceased immediately.

It is concerned that some businesses are breaching the spirit of the OFT debt collection guidance by using this trace method, which has the potential to reveal to neighbours that individuals are being pursued for payment of debts.

The OFT is calling on businesses in the sector to take positive steps to address these concerns. If businesses continue to use these tactics, the OFT will look to take swift enforcement action.

The OFT has imposed requirements on one 'trace and collect' company, Link Financial Limited (Link), to confirm that it will no longer engage in this practice.

Following an application by Link to renew its existing consumer credit licence, the OFT, working alongside Lambeth Trading Standards, reviewed Link's business practices and raised concerns about the use of this trace method.

Link agreed to stop using the practice and, as allowed under the Consumer Credit Act 1974, made specific proposals which addressed the OFT's concerns. As a result, the OFT has imposed requirements which state that Link must not in future use neighbours to pass on messages to trace subjects.

Nigel Cates, OFT Deputy Director for Consumer Credit, said:
'Using neighbours to pass on messages to trace subjects is an unacceptable practice that contravenes our debt collection guidance. It has the potential, whether unintentional or not, to lead to the disclosure of private financial affairs and to cause distress and embarrassment, and we have made this clear in discussions with the Credit Services Association.

'We are pleased that Link has acted responsibly and taken positive steps to change its policies and procedures.

'If other businesses continue to engage in similar practices we will not hesitate to use our licensing and enforcement powers.'